FFELP Update

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Session 19

• FFELP Update
• PLUS MPN

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PLUS MPN
PLUS MPN

• Dear Colleague Letter
• GEN-03-03
• Posted to IFAP on February 7, 2003
• Transition Period
• PLUS MPN may be used for Federal PLUS Loans for
  loan periods beginning on or after July 1, 2003
• PLUS MPN must be used for Federal PLUS Loans for
  loan periods beginning on or after July 1, 2004,
  or any loan certified after July 1, 2004
  regardless of loan period

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PLUS MPN
PLUS MPN

• Multi-year Use of the PLUS MPN
• Multi-year feature note for one dependent student
• New PLUS MPN required when
• Change of Lender
• Change of Parent Borrower
• Parent borrows for more than one dependent
  student
• Lender, school, or borrower may request a new
  PLUS MPN for each new loan period
• Use of an endorser

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PLUS MPN
PLUS MPN

• Form Design
• Multi-year use
• Addition of the borrowers e-mail address
• Addition of the references e-mail address
• Deletion of the State of Legal Residence

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PLUS MPN
PLUS MPN

• Form Design (continued)
• Removal of school certification section
• Separate form created to accommodate the paper
  process
• Elimination of lender section
• Deletion of the Requested Loan Amount
• Revision of the Student Section

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PLUS MPN
PLUS MPN

• Non-data item changes
• Multi-year and multi-borrowing language added
  throughout the form
• Borrower certification and authorization
  information appears on the face of the form
• Default and overpayment question no longer a
  check-off box
• Authorization to permit schools to transfer loan
  proceeds to students account incorporated in
  the Borrower Request, Certifications, and
  Authorizations

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PLUS MPN
PLUS MPN

• All domestic schools who participate in FFEL
  Program can use the PLUS MPN as a multi-year note
• Foreign schools Only if the school has been
  expressly approved by the Secretary
• Additional information contained in DCL GEN-02-10
  published in November 2002

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PLUS MPN
PLUS MPN

• Requested Loan Amount
• Parent must indicate to either the school, the
  guarantor, or the lender the PLUS loan amount
  that he or she wants to borrow
• Must collect, for each PLUS Loan, the requested
  loan amount from the parent borrower prior to
• School certifying each loan
• Lender approving each loan

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PLUS MPN
PLUS MPN

• Requested Loan Amount
• Must establish and document the process under
  which the requested amount will be collected
• Parent borrower must provide to the school or
  lender the amount of PLUS Loan funds requested
  for each separate loan for each dependent student

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PLUS MPN
PLUS MPN

• Methods to collect requested loan amount
• School Certification Form
• A separate PLUS Loan amount request form
• A parent response section on the institutions
  financial aid award letter
• Documented telephone or electronic requests

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PLUS MPN
PLUS MPN

• School Certification
• Electronically
• Federal PLUS Loan Information and School
  Certification

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PLUS MPN
PLUS MPN

• Requirement for PLUS MPN and Expiration
  Conditions
• Prior to disbursing a PLUS loan, the lender must
  determine that the loan is supported by a signed
  PLUS MPN and
• None of the expiration conditions apply

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PLUS MPN
PLUS MPN

• Expiration Conditions
• The date the lender receives written notification
  from the parent borrower requesting that a
  previously signed PLUS MPN no longer be used for
  additional loans
• Twelve months after the date the original PLUS
  MPN was signed if no disbursements were made
  under that MPN
• Ten years from the date the parent signed the
  PLUS MPN or the date the lender receives the PLUS
  MPN

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PLUS MPN
PLUS MPN

• PLUS Credit Report Requirements
• FFEL program regulations at 34 CFR
  682.201(b)(1)(vii) require the lender to
  determine whether the parent applicant is
  ineligible based on an adverse credit history
• The regulations require the lender to obtain a
  credit report from at least one national credit
  bureau
• By signing the PLUS MPN, the parent applicant
  acknowledges this review of their credit history

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PLUS MPN
PLUS MPN

• Use of an endorser
• If parent has an adverse credit history an
  endorser can be used
• A separate Endorser Addendum is required for each
  PLUS Loan
• When an endorser is used the PLUS MPN becomes a
  single-loan promissory note

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PLUS MPN
PLUS MPN

• Borrowers Rights and Responsibilities
• Two standard disclosures
• Borrowers Rights and Responsibilities Statement
• Plain Language Disclosure

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PLUS MPN What are the implementation issues?

• Informing Institutions and Parents
• Multiple Options
• PLUS APN
• PLUS MPN
• Establishing a process to accommodate
• Multiple Options for all types of institutions
  with varying methods of processing

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What are the PLUS MPN implementation issues?

• System Modification
• Requested Loan Amount
• Serialization
• Credit Report Requirements

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Informing Institutions and Parents

• Institution - Loan Notes
• Institution Notify students and parents
• Lender
• Instructions with the PLUS MPN

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Multiple Options

• PLUS APN only
• PLUS MPN only
• Annual or serial
• PLUS APN or PLUS MPN

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Multiple Options

• Options selected by institution
• Mailing in December to institutions to select
  options to be used for 2003-2004

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Multiple Options
b. For the 2003/2004 academic year, what type
PLUS Application will you be using? (Check one)
_____Application/Promissory Note _____a
multi-year note (Master Promissory Note) _______
an annual note (Master Promissory
Note)     1.     Based on the selection type you
have indicted in (1b), please indicate how you
want the system to process PLUS Promissory Notes
when they are received.   _____ 1.
Application/Promissory Note. Accept only APNs.
If an MPN is received change it to an APN
generating an APN correction to the
borrower. _____ 2. Multi-Year Master Promissory
Note. Accept only MPNs. If an APN is received
change it to an MPN generating an MPN correction
to the borrower. _____ 3. Annual Master
Promissory Note. Accept only MPNs . If an APN
is received change it to an MPN generating an MPN
correction to the borrower. _____ 4. Accept
whatever form is sent from the borrower APN or
MPN generating the same Prom Note type back to
the borrower if needed.  
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Requested Loan Amount

• Who collects the amount requested?
• Guarantor on behalf of the school and/or lender
• School certification form
• Online via the PLUS Pre-Approval Process
• Institution
• Lender

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System Modification

• PLUS MPN production
• System enhancements
• Start-up process within timeframe needed for
  institutions

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Serialization

• Amount requested for subsequent borrowing
• Notification via e-mail
• Guarantor on behalf of the school and/or lender
• School certification form
• Online via the PLUS Pre-Approval Process
• Institution
• Lender

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Credit Report Requirements

• Timeframe in which to conduct the credit check
• Notification of an adverse credit report
• Credit Report for subsequent borrowing

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• Implementing the PLUS MPN
• A Schools Perspective
• Penn State and the PLUS MPN
• Melissa Kunes
• Penn State University

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PLUS MPN Implementation Process

• Map out your current PLUS Process
• Identify the players
• Identify the action steps with each player
• Work with your partners
• Lenders
• Guarantors
• Meet with players to map out a new flow

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PLUS MPN Implementation Process

• Communication
• How will you communicate the new process to
  families
• Identify the trigger
• How will you prompt families to request PLUS in
  subsequent years
• How will you collect REQUESTED AMOUNT in future
  years

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PLUS MPN Implementation Process

• Will any modifications or addendums to the new
  PLUS MPN form be used
• Where will the MPN data be stored
• Direct borrower to student relationship
• MPN date needs to be recorded for all

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PLUS MPN Implementation Process

• Take advantage of systems or technology already
  in place
• Use the Web when possible
• Implement PLUS Pre-Approval Process
• A credit check will be needed each year, or for
  each loan period that is over 90 days beyond
  prior credit check

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PLUS MPN Implementation Process

• Keep it simple -
• Dont over-orchestrate!

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2003-04 Penn State Implementation Strategy

• One Primary Lender
• One Primary Guarantor
• Continual communication flow with both
• Communication Pieces
• Information available on the Web
• Prior borrowers will receive letter of
  instruction
• New students will receive instructions with
  printed award letter

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2003-04 Penn State Implementation Strategy

• Year One
• New PLUS MPN format will be available in PDF
  format on the Web
• Year Two
• PLUS Pre-approval on the Web will be used in
  subsequent year to collect requested amount
• Trigger to lender/guarantor to approve funds

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2003-04 Penn State Implementation Strategy

• Guarantor will store MPN expiration date
• Direct Borrower to student relationship
• No more paper to get lost or slow the process
  down
• Funds will arrive in record time!

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Contact Us

• We appreciate your feedback and comments. We can
  be reached
• Mary Miller
• Phone (800) 699 - 2908, Option 3
• Fax (724) 357 - 5849
• Email mmiller3_at_aessuccess.org
• Melissa Kunes
• Phone (814) 863 - 2869
• Fax (814) 863 - 0322
• Email MJK5_at_psu.edu

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